Escrow Agreement This Escrow Agreement This: Fill & Download for Free

What Does an Escrow Company Do?Title III requires that equity crowdfunding portals use a qualified third party ("escrow agent") to (1) hold investors’ money until a deal closes, or (2) return the money to investors if the deal is not fully funded. Funding portals are prohibited from handling funds or securities.Escrow agents may be any of the following three types:Banks,Credit unions, or,Qualified registered broker-dealers**Broker-dealers must be members of FINRA and carry customer or broker or dealer accounts and hold the funds or securities for such person.Maintenance and transmission of investor funds.Under applicable crowdfunding rules, escrow agents are required to "promptly deposit" the investor's funds in a separate bank account and either (i) hold the funds as trustee, or (ii) require the bank to hold the funds in escrow until the appropriate event or contingency has occurred. See Rule 15c2-4(b)(1). When the appropriate event or contingency has occurred, the escrow agent must "promptly transmit or return" to the person(s) entitled to such funds. See Rule 303(e)(1) [link inactive].How Much Should It Cost?It will vary depending on the platform. But here is a sample of published escrow fees:1. FundAmerica:Open Escrow: $225 (setup), $25/mo. bank account feeTransaction Fee: $10 per transaction <= $500, $35 > $5002. CrowdPay (Goldstar Bank):Open Escrow – $500. Accounts will terminate after 6 months.Escrow Renewal – $250Production API Keys – $1,500 (one-time fee)Issuer Background Check – $30 per business principalInvestor AML/CIP (Anti-Money Laundering) – $2 per investorEscrow Cancellation - Funds Returned to Investors - No additional fee.One-Time Disbursement of Funds to Issuer –Up to $1MM: 25 basis points (.25%) (less $500 Escrow Account Creation)$1MM - $5MM: 20 basis points (.20%) with a $2.5K minimum fee.> $5MM: 15 basis points (.15%) with a $10K minimum fee.Milestone-based Disbursement of Funds to Issuer - 30 basis points (.30%) per distribution with a minimum distribution fee.IRA Fees to Investors – $65 (flat) Annual Maintenance Fee + $25 One-Time Establishment Fee.Note: GoldStar IRAs set up through portals that utilize our APIs are NOT subject to the $25 One-Time Establishment Fee.Investor Funds Collection - No fee Via ACH; $25 Via Wire Transfer; $5 Via CheckInvestor Funds Withdrawal Request - No fee Via ACH; $25 Via Wire Transfer; $5 Via Check(Not Asked) Items that Escrow Requires from Crowdfunding Portal:Proof of Portal RegistrationPortal AgreementIRA Agreement (if applicable)(Not Asked) Items that Escrow Requires From Crowdfunding Issuer:Bad Actor Check (from Portal)Escrow ApplicationRequired Information For Escrow SetupEscrow Agreement and Joint Instructions (signed by Issuer and Portal)Resolution of Borrowing Authority (if debt/lending)Certificate of Incorporation (or similar)PPM/Offering Memorandum (or similar)IRA Agreement (if applicable)For a list of all escrow agents filed for Title III, click here:SEC Full Text Search

For Founders:Issuer Agreement with the Funding Portali) compensation arrangement with the funding portalA funding portal may charge an issuing company a commission equal to a percentage of gross proceeds raised from n offering as well as other service fees. A funding portal may also take an equity stake in an issuing company as compensation for its services.ii) what services does the funding portal provide?A funding portal may provide services in assisting an issuing company during its fundraising process. For example, some portals may help issuing companies to design their funding campaigns and submit the Form C.Escrow Agreement with the Escrow AgentFounders should be aware of the fees charged by the escrow agent. For example, some escrow agents charge fees per transaction and these fees are payable even if your funding campaign is not successful.For Investors:The Form CInvestors should read the Form C of an issuing company before investing money. A Form C, which is essentially a Private Placement Memorandum (PPM), is an “Offering Statement” for an issuing company to file with the SEC the disclosures required for an offering made in reliance on Regulation Crowdfunding. In the Form C, investors can find the corporate information, the financial statements, the business plan, the offering terms of the securities of an issuing company, and the material risk factors of investing in the securities of the issuing company.Share Subscription AgreementsInvestors should read the Share Subscription Agreement carefully. For example, what will you get if you invest in a securities offering made in reliance on Regulation Crowdfunding? Common Stocks, Preferred Stocks or Convertible Notes? You should be aware that a considerable number of crowdfunding offerings are executed by a new form of financing instrument—the Simple Agreement for Future Equity—or “SAFE,” we mostly call. The SAFE is a means of investing in startups that expected to raise institutional venture capital at a later date. Investors should be aware that although the SAFE resembles a classic seed-stage convertible note in most respects, it DOES NOT:a) have a maturity date;b) accrue interest while it remains outstanding;c) pay dividends; andd) entitle its holder to voting rights.Reference: Crowdfunding and the Not-So-Safe SAFEDisclaimer:The above answer is prepared for informational purposes only and should not be considered legal advice. Readers should consult securities attorneys before investing securities offerings or issuing securities in reliance on Regulation Crowdfunding.

I'm not a lawyer, but I've been through this a number of times.If you're already incorporated, you all need to sign stock purchase agreements with an appropriate vesting schedule, which is typically structured as lapse of right of repurchase on a monthly vesting schedule over 4 years. Usually this document will also contain some other terms about right of repurchase, escrow, SEC rules compliance, a warning about tax implications, rights of first refusal, and conditions in case of merger, acquisition, or other change of control of the company. If married, a spousal consent form is required as well. After such a signing, the purchaser will need to file a Section 83(b) election with the IRS in regards to the purchased stock within 30 days. Along with this document, there is generally a stock power agreement that gives the secretary of the company, or some other assigned escrow agent (such as the company's attorney) the power to issue and hold on file all the stock certificates according to the purchase agreement. This just means nobody has to physically shuffle paper around. You also need everyone to sign an invention assignment agreement to cover the company against intellectual property claims.If you're adding the new co-founders to the board of directors, then you'll also need some paperwork for that, usually a few small documents including a proposal and board approval, any change to the company by-laws (if needed), and a stockholder consent.All of the above applies to a C-corporation (typically incorporated in Delaware due to its favorable laws and able courts). S-corporations should be similar, but LLCs will require different paperwork; both will have different tax implications.If you aren't yet incorporated, then I don't really know. Either way, see a lawyer; the ones that regularly deal with startups have these documents nearly down to boilerplate, and will provide it for low (and sometimes deferred) cost.